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Middle-Aged Assets Versus Younger Models

What's trending in aircraft leasing and why.

The 10 largest lessors own or manage about 6,000 aircraft between them, and most boast an average portfolio age of less than five years.

Granted, those averages are weighted toward higher value (and therefore, usually, younger) aircraft, but the huge backlogs held by top lessors indicate a definite preference for new equipment.

Yet those backlogs over-shadow demand for mid-life aircraft, the market for which remains robust and potentially even stronger than that for new models.

Consultancy IBA Group has calculated that 47% of the global leased fleet is 8-18 years old, whereas only 36% is in the less than 8-year-old bracket.

This is based on a leased fleet of 12,760 aircraft – 48% of the total passenger fleet, according to the consultancy.

Furthermore, data from IBA shows that the average age of the global commercial aircraft fleet-- owned and leased--has been creeping up for a decade, from 8.9 years in 2006 to 11 years now.

This is partly because technology insertion packages and other modifications have allowed older aircraft and engines to operate more efficiently and reliably for longer. In addition, low fuel prices have allowed many operators to push back fleet renewal and stick with older equipment.

“Airbus is prepared for deferrals of A320neos and Virgin Australia is now deferring the 737 MAX because in the current fuel environment they can’t justify the higher unit costs of those aircraft and are happy to plod on with what they’ve got,” says Jonathan McDonald, head analyst for commercial and aging aircraft at IBA.

Of course, none of the above means that big lessors are making a mistake. The paperwork and technical management attached to older aircraft and engines can make managing the individual asset more trouble than it’s worth for the owner of hundreds of aircraft.

For smaller companies, however, older aircraft offer lucrative opportunities, such as re-leasing, teardown and cargo conversion.

To find out more about the mid-life leasing market, pick up the April issue of Inside MRO.

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